Taiwan, Singapore sign free-trade pact

‘DOMINO EFFECT’:Officials are hoping that the agreement could encourage other nations to ink similar pacts, aiding Taiwan’s goal of joining regional economic bodies

By Shih Hsiu-chuan / Staff reporter

Minister of Economic Affairs Chang Chia-juch, second left, and Minister of Foreign Affairs David Lin, right, hold a news conference in Taipei after Taiwan and Singapore signed a free-trade agreement in Singapore earlier yesterday.

Photo: Pichi Chuang, Reuters

Taiwan yesterday signed a far-reaching free-trade agreement (FTA) with Singapore — the first of its kind with a Southeast Asian country — in a move the government said would boost the nation’s efforts to pursue further economic engagement with trading partners bilaterally and multilaterally.

Minister of Foreign Affairs David Lin (林永樂) said the agreement demonstrated Taiwan’s commitment to trade and investment liberalization to the global community.

The agreement “serves as an example” for Taiwan’s negotiation with other countries to sign economic cooperation agreements, Lin said.

“It could also trigger a domino effect” by encouraging other countries to open talks with Taiwan on similar trade accords, Lin added.

The pact — called the Agreement between Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Partnership (ASTEP) — was signed by Representative to Singapore Fadah Hsieh (謝發達) and Singaporean Trade Representative to Taiwan Calvin Eu at a ceremony held at 9:30am in Singapore.

With Beijing’s insistence that FTAs can only be concluded among sovereign states, Taiwan has to conclude FTA-like agreements under a different name, such as the Agreement between New Zealand and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Cooperation signed in August.

The exceptions are the four FTAs that Taiwan has with five diplomatic allies in Central America — Panama, Guatemala, Nicaragua, El Salvador and Honduras.

Taiwan will remove 99.48 percent of its tariff lines within 15 years at the latest, with the exception of 40 agricultural products, including rice, mangoes, garlic, shiitake mushrooms, red beans, shelled ground-nuts and liquid milk.

Once the agreement takes effect, expected early next year, Taiwan will provide Singapore immediate tariff-free access to 65.97 percent of its agricultural products and 87.39 percent of its industrial products, while duties on the rest of the products will be reduced in three stages over a 15-year period.

The tariff cuts will have a limited impact on Taiwan’s agricultural sector because Singapore is not an agriculture-based economy, he said.

Chang added that throughout the two-and-a-half years of negotiations, Taiwan pressed for a longer tariff phase-out period to give less-competitive, domestic-oriented industries, such as auto parts, engines, motorcycles, towels and cotton clothing, time to adjust.

In return, Singapore, which has a very open trading regime that levies tariffs on only six beverage products, extended zero tariffs to all imports from Taiwan.